Mayfair Gold Sees Muddy Waters Demand Board Changes

Muddy Waters Capital has gone activist investor on Mayfair Gold (TSXV: MFG). The firm, lead by Carson Block, is aiming to reconstitute the board of directors of Mayfair follow conduct that it says “has raised serious concerns.”

In announcing that they are becoming an activist investor, Block commented that key objectives set by Mayfair have repeatedly failed to be hit, which has eroded Muddy Waters’ faith in the company being able to set realistic goals and strategic targets. Other issues at hand include excessive option issuances, and the failure to grant a seat on the board to one of the firms largest shareholders.

“The conduct of the Board has raised serious concerns that we believe must be addressed promptly. [..] We further understand that over the past few months, the Board has resisted granting a seat on the Board to one of the Company’s largest shareholders, raising concerns regarding entrenchment, which is antithetical to our belief that key shareholders of issuers are entitled to board representation absent clear evidence that they will not act in the best interests of the company,” commented Block, whom is also chief investment officer for Muddy Waters Capital.

The firm has reportedly tried to resolve its concerns behind closed doors with little success.

The objective of the activist campaign is the replacement of Harry Pokrandt, a director of the company, along with additional of another director seat to the board. Muddy Waters however has not limited itself, stating that additional changes may be sought to enhance shareholder value.

The firm, whom currently holds a 16.77% stake through direct ownership and shares owned by a partner and a consultant to Muddy Waters, is demanding a shareholder meeting take place no later than June 5, 2024.

Mayfair meanwhile claims that prior to March 14, no discussions had been held with Muddy Waters, when the activist firm suddenly demanded that the board halt a recruitment process for the board and instead appoint Darren McLean, a consultant of Muddy Waters, to the board, and appoint him as Chair of the Board. The firm reportedly failed to provide nomination materials or credentials or biographical information on McLean.

The company reportedly declined the demand due to having no time to interview McLean or review his credentials, and instead suggested he be included in the ongoing recruitment process.

Mayfair also disputed the claim that Muddy Waters attempted to resolve the matter privately, and instead commented that the activist firm has “chosen to launch a costly and value-destructive proxy contest.”

Mayfair Gold is currently focused on developing the Fenn-Gib gold project, which is found in the Timmins region of Ontario. The project currently holds a 3.38 million ounce resource of indicated gold, which is contained within an open-pit model. A resource update for the project is expected in the second quarter of 2024, with a pre-feasibility study planned for the first half of 2024.

Mayfair Gold last traded at $2.10 on the TSX Venture.

CORRECTION: A former version of this article stated that Harry Pokrandt is a current managing director of Macquarie Capital Markets. This is incorrect, as he exited that role in 2015. He is currently a director of Kore Mining, Vizsla Silver, and Fiore Exploration in addition to his role at Mayfair Gold.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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